The 72nd Annual General Meeting of Shareholders Q & A

The 72nd Annual General Meeting of Shareholders

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11	This is a question to Mr. Miyamoto about how he has been involved in development. Either in the development of hardware or software, I would like to know an example in which he came up with the core idea, and if he is still involved in such processes. I believe he is already about 60 years old and I was wondering what will happen to Nintendo after he has left the company. How will Nintendo deal with this issue?
11	Shigeru Miyamoto (Senior Managing Director, General Manager of the Entertainment Analysis and Development Division): As I am getting older, I have already started thinking of Nintendo without me in the future and I strongly feel that the company has steadily been preparing for doing business after I leave here. However, last year when I said at an interview overseas that I was doing various things in prospect of Nintendo without me, it led to a direct report on my retirement. So I am aware I have to be careful in talking about this sort of thing. Iwata: He told the media that he kept referring to his coming retirement in his department to encourage his subordinates not to rely on him too much. Then suddenly a report of the retirement of Shigeru Miyamoto appeared. Miyamoto: Even now, I am making things and interested in the creative side just as I was before. However, with regard to the big picture of, say, a new gMario Karth or the gSuper Marioh series, younger people are already taking the main roles and I am just thinking as one of their co-workers. One big thing I recently handled is the Audioguide Louvre - Nintendo 3DS, referred to earlier in this meeting. This has not made money yet, but it has the potential to be one of our core businesses in the future. We are making a game called gNintendo Land,h but apart from making such games, I often think of other things, such as what the future of the Japanese movie industry will be like. I do not have any concrete visions yet, but I am trying to keep my eyes on a variety of fields and to find any small possibilities for Nintendo to be involved in one way or the other. I should be careful about telling you about these things and I would like to add that we are not announcing any concrete business plans here. I would also be glad if you carefully tell someone else about my remarks. Among these big things in our future prospects, it is so important to carefully choose the next project, and I myself have decided on a specific project like the network issue mentioned before. As I would like people working on each project to be able to do that kind of thing by themselves in the future, I repeatedly say to them that today might be my last day at Nintendo and work with them today at the forefront of development. However, I enjoy creating things and will be in active service at Nintendo for the time being. I hope you will look forward to our future products. Iwata: What I can add is that Mr. Miyamoto still will be actively creating things but we are working for the transition of power to go to younger people at the same time. Naturally the directors here will inevitably become too old to be able to continue their current positions someday and Nintendo might decrease its competitiveness without competent replacements. We are proceeding with preparations to avoid that situation.

This is a question to Mr. Miyamoto about how he has been involved in development. Either in the development of hardware or software, I would like to know an example in which he came up with the core idea, and if he is still involved in such processes. I believe he is already about 60 years old and I was wondering what will happen to Nintendo after he has left the company. How will Nintendo deal with this issue?

Shigeru Miyamoto (Senior Managing Director, General Manager of the Entertainment Analysis and Development Division):

As I am getting older, I have already started thinking of Nintendo without me in the future and I strongly feel that the company has steadily been preparing for doing business after I leave here. However, last year when I said at an interview overseas that I was doing various things in prospect of Nintendo without me, it led to a direct report on my retirement. So I am aware I have to be careful in talking about this sort of thing.

Iwata:

He told the media that he kept referring to his coming retirement in his department to encourage his subordinates not to rely on him too much. Then suddenly a report of the retirement of Shigeru Miyamoto appeared.

Miyamoto:

Even now, I am making things and interested in the creative side just as I was before. However, with regard to the big picture of, say, a new gMario Karth or the gSuper Marioh series, younger people are already taking the main roles and I am just thinking as one of their co-workers. One big thing I recently handled is the Audioguide Louvre - Nintendo 3DS, referred to earlier in this meeting. This has not made money yet, but it has the potential to be one of our core businesses in the future. We are making a game called gNintendo Land,h but apart from making such games, I often think of other things, such as what the future of the Japanese movie industry will be like. I do not have any concrete visions yet, but I am trying to keep my eyes on a variety of fields and to find any small possibilities for Nintendo to be involved in one way or the other. I should be careful about telling you about these things and I would like to add that we are not announcing any concrete business plans here. I would also be glad if you carefully tell someone else about my remarks. Among these big things in our future prospects, it is so important to carefully choose the next project, and I myself have decided on a specific project like the network issue mentioned before. As I would like people working on each project to be able to do that kind of thing by themselves in the future, I repeatedly say to them that today might be my last day at Nintendo and work with them today at the forefront of development. However, I enjoy creating things and will be in active service at Nintendo for the time being. I hope you will look forward to our future products.

Iwata:

What I can add is that Mr. Miyamoto still will be actively creating things but we are working for the transition of power to go to younger people at the same time. Naturally the directors here will inevitably become too old to be able to continue their current positions someday and Nintendo might decrease its competitiveness without competent replacements. We are proceeding with preparations to avoid that situation.

12	The Wii is the best-selling console and holds the top share among the video game consoles for now, but both in Japan and overseas for about these two years, the Wii has been sometimes excluded from what is called multiplatform software and some games have been released only for the PS3 and the Xbox 360. When the Wii U has entered a mature phase four or five years later, will it be able to compete with a next-generation console by Microsoft or personal computers? I am concerned about a future situation in which a game is available for consoles other than the Wii U due to a lack of power. Please let me know what efforts you have made to avoid it.
12	Iwata: We have not successfully kept the momentum of the Wii for about the last two years because third-party publishers have released a smaller number of game titles and Nintendo has also decreased new games for the platform in preparation for the launch of the Nintendo 3DS and the Wii U. As the Wii has no such system as the gMiiverseh in the Nintendo Network mentioned earlier today, in which consumers have a chance to encounter new games in communication with others, the momentum temporarily provoked by a new game has easily been diminished. We cannot promise that the Wii U will never be excluded from multiplatform software for eternity, but we can at least assure you that the Wii U will not have such a big difference as the Wii had in comparison to how, on other platforms, developers could expect very different graphic capabilities of generating HD-applicable high-resolution graphics. Other companies might launch a next-generation console with more power, but we donft necessarily think that the difference between the Wii U and such console will be as drastic as what you felt it was between the Wii and the other consoles because there will be fewer and fewer differentiators in graphics. Naturally some consumers are very sensitive about such a small difference in graphics so that we will make efforts to make the most of the performance of the Wii U to keep up with technological innovations and not to make the system out-of-date soon. However, as the structure of the product called the Wii U is as if we are including both a video game console and a handheld device, if we were not careful about how luxurious both of them were, we could end up having to offer the price of the two hardware systems combined, which would not be an acceptable price for the consumers. We had to design it by balancing the performance and the costs. I am not sure this is an appropriate expression, but video game consoles have long been gparasitesh of TV sets at home. In other words, game consoles have used TV sets in a family instead of being equipped with their own screen. However, the Wii U will be the first console free from TV sets, in which you can play the Wii U while someone else is watching TV or you yourself can watch TV while using the Wii U. As you can experience deeper entertainment with both the Wii U GamePad and the TV screen, we would like to enrich it but, at the same time, we hope to furnish it with games you can enjoy only with the Wii U GamePad. In addition, games on two screens are not just the same with what we did for the Nintendo DS. As the TV screen can be distant from the Wii U GamePad, not like the Nintendo 3DS, we can offer different options for use. Also, in multiplayer games, a player with the Wii U GamePad will play a different role from those with Wii Remote controllers. We are thinking of what we call gasymmetric game play,h in which players have different roles in one game, like in Tag. The player with the Wii U GamePad will be able to know what other players are doing when they are playing on the TV screen. The Wii U GamePad will work as a window where you can communicate with other players in their living rooms. We say that the Wii U GamePad could be a gSocial Window,h or a window to link your living rooms to othersf. Furthermore, the Wii U can change the way you use the TV set in your living room, although the Wii U is a video game system in its nature and this is just an added component. More specifically, there are currently many videos on the Internet, many of which are very interesting and suitable for family entertainment. You have seen them by PC, smartphones or tablets, but with the Wii U you can search a good movie on the Wii U GamePad, tell everyone there to see it and easily move it to the TV screen. In this way, a video-sharing website can be a great form of entertainment. In addition, the Wii U can make it easier to use video-on-demand services, where you can enjoy films and TV programs through the Internet and which are more popular overseas than in Japan. Not only by competing with other platforms only in regard to the machinesf spec. figures but proposing various ways of using the Wii U, we would like to create a future so even family members who have never touched any video game systems will consider the Wii U something that is convenient to use so that we can maintain its competitiveness for a long time.

The Wii is the best-selling console and holds the top share among the video game consoles for now, but both in Japan and overseas for about these two years, the Wii has been sometimes excluded from what is called multiplatform software and some games have been released only for the PS3 and the Xbox 360. When the Wii U has entered a mature phase four or five years later, will it be able to compete with a next-generation console by Microsoft or personal computers? I am concerned about a future situation in which a game is available for consoles other than the Wii U due to a lack of power. Please let me know what efforts you have made to avoid it.

Iwata:

We have not successfully kept the momentum of the Wii for about the last two years because third-party publishers have released a smaller number of game titles and Nintendo has also decreased new games for the platform in preparation for the launch of the Nintendo 3DS and the Wii U. As the Wii has no such system as the gMiiverseh in the Nintendo Network mentioned earlier today, in which consumers have a chance to encounter new games in communication with others, the momentum temporarily provoked by a new game has easily been diminished.

We cannot promise that the Wii U will never be excluded from multiplatform software for eternity, but we can at least assure you that the Wii U will not have such a big difference as the Wii had in comparison to how, on other platforms, developers could expect very different graphic capabilities of generating HD-applicable high-resolution graphics. Other companies might launch a next-generation console with more power, but we donft necessarily think that the difference between the Wii U and such console will be as drastic as what you felt it was between the Wii and the other consoles because there will be fewer and fewer differentiators in graphics. Naturally some consumers are very sensitive about such a small difference in graphics so that we will make efforts to make the most of the performance of the Wii U to keep up with technological innovations and not to make the system out-of-date soon. However, as the structure of the product called the Wii U is as if we are including both a video game console and a handheld device, if we were not careful about how luxurious both of them were, we could end up having to offer the price of the two hardware systems combined, which would not be an acceptable price for the consumers. We had to design it by balancing the performance and the costs.

I am not sure this is an appropriate expression, but video game consoles have long been gparasitesh of TV sets at home. In other words, game consoles have used TV sets in a family instead of being equipped with their own screen. However, the Wii U will be the first console free from TV sets, in which you can play the Wii U while someone else is watching TV or you yourself can watch TV while using the Wii U. As you can experience deeper entertainment with both the Wii U GamePad and the TV screen, we would like to enrich it but, at the same time, we hope to furnish it with games you can enjoy only with the Wii U GamePad. In addition, games on two screens are not just the same with what we did for the Nintendo DS. As the TV screen can be distant from the Wii U GamePad, not like the Nintendo 3DS, we can offer different options for use. Also, in multiplayer games, a player with the Wii U GamePad will play a different role from those with Wii Remote controllers. We are thinking of what we call gasymmetric game play,h in which players have different roles in one game, like in Tag. The player with the Wii U GamePad will be able to know what other players are doing when they are playing on the TV screen. The Wii U GamePad will work as a window where you can communicate with other players in their living rooms. We say that the Wii U GamePad could be a gSocial Window,h or a window to link your living rooms to othersf.

Furthermore, the Wii U can change the way you use the TV set in your living room, although the Wii U is a video game system in its nature and this is just an added component. More specifically, there are currently many videos on the Internet, many of which are very interesting and suitable for family entertainment. You have seen them by PC, smartphones or tablets, but with the Wii U you can search a good movie on the Wii U GamePad, tell everyone there to see it and easily move it to the TV screen. In this way, a video-sharing website can be a great form of entertainment. In addition, the Wii U can make it easier to use video-on-demand services, where you can enjoy films and TV programs through the Internet and which are more popular overseas than in Japan. Not only by competing with other platforms only in regard to the machinesf spec. figures but proposing various ways of using the Wii U, we would like to create a future so even family members who have never touched any video game systems will consider the Wii U something that is convenient to use so that we can maintain its competitiveness for a long time.

13	I donft think that the current Nintendo is making full use of its potential. I believe that there is a way to improve your business more and more by taking advantage of what you already have. As I have a specific plan for it, I would like to make a 10-minute presentation to Mr. Miyamoto, Mr. Takeda and Mr. Iwata as soon as tomorrow if it is possible.
13	Iwata: It is difficult for all of us to devote time to your specific plan. However, if you can communicate with one of our employees available here today, we will definitely hear about your ideas by receiving his/her report.

I donft think that the current Nintendo is making full use of its potential. I believe that there is a way to improve your business more and more by taking advantage of what you already have. As I have a specific plan for it, I would like to make a 10-minute presentation to Mr. Miyamoto, Mr. Takeda and Mr. Iwata as soon as tomorrow if it is possible.

Iwata:

It is difficult for all of us to devote time to your specific plan. However, if you can communicate with one of our employees available here today, we will definitely hear about your ideas by receiving his/her report.

14	As the Wii U will have (a controller with) a touch panel and will use two screens, I was wondering if you are going to make it compatible with the Nintendo DS. As you announced the Nintendo 3DS XL with larger screens, do you plan such an extra function for those who prefer as big screens as possible?
14	Iwata: I am afraid I cannot say anything about your question today. Please let me receive it as your opinion that there is such consumer need and let us study it internally.

As the Wii U will have (a controller with) a touch panel and will use two screens, I was wondering if you are going to make it compatible with the Nintendo DS. As you announced the Nintendo 3DS XL with larger screens, do you plan such an extra function for those who prefer as big screens as possible?

Iwata:

I am afraid I cannot say anything about your question today. Please let me receive it as your opinion that there is such consumer need and let us study it internally.

15	In terms of expanding the gaming population, does Nintendo have any intention to increase the population by launching analog games instead of developing computer games?
15	Iwata: I interpret your question as rather a proposal that the company might want to consider developing not only digital products but also analog ones in order to expand the gaming population. From the perspective of Nintendofs business deployments in the world, computer software games offer exceptional conveniences to our business, as they can be easily mass produced once the hardware becomes popular enough and can be delivered to many people at a time. Further, our products have the advantage that they can organically combine the other technologies in line with evolutions of digital and network technologies. Of course, I am not saying that we will never consider the possibility of deploying any analog-based entertainment at all. In fact, Nintendo, as the company which originally manufactured and still has been manufacturing analog playing cards (both Western- and Japanese-style), will continue to manufacture them. I would like to take your question as advice that the company may be able to find an interesting and fun opportunity when it combines our current strengths in computer-based interactive entertainment with the analog ones.

In terms of expanding the gaming population, does Nintendo have any intention to increase the population by launching analog games instead of developing computer games?

Iwata:

I interpret your question as rather a proposal that the company might want to consider developing not only digital products but also analog ones in order to expand the gaming population. From the perspective of Nintendofs business deployments in the world, computer software games offer exceptional conveniences to our business, as they can be easily mass produced once the hardware becomes popular enough and can be delivered to many people at a time. Further, our products have the advantage that they can organically combine the other technologies in line with evolutions of digital and network technologies. Of course, I am not saying that we will never consider the possibility of deploying any analog-based entertainment at all. In fact, Nintendo, as the company which originally manufactured and still has been manufacturing analog playing cards (both Western- and Japanese-style), will continue to manufacture them. I would like to take your question as advice that the company may be able to find an interesting and fun opportunity when it combines our current strengths in computer-based interactive entertainment with the analog ones.

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